The Bank’s legal team says the remedial action prescribed by Public Protector Busisiwe Mkhwebane falls outside her powers
The Bank said in a statement on Tuesday that the ordered remedial action directing Parliament to change the Constitution to amend the Reserve Bank’s powers, had had an immediate and negative impact on the markets and the exchange rate of the rand.
Public Protector Busisiwe Mkhwebane ordered the change as part of the remedial actions in the CIEX report investigation, released at a briefing in Pretoria on Monday.
It would effectively put an end to inflation targeting, a core tenet of the Bank’s monetary policy.
Mkhwebane’s proposed change is that the Bank’s primary objective should be to “promote balanced and sustainable economic growth in the republic while ensuring the socioeconomic wellbeing of the citizens is protected”.
“The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well understood role that central banks play in securing price stability. The remedial action proposed will have a negative impact on the independence of the Reserve Bank,” the Bank said on Tuesday.
It said it had consulted its legal team and had been advised that the remedial action prescribed by the Public Protector falls outside her powers and is unlawful.
The Bank said it had been advised to bring urgent review proceedings to have the remedial action set aside and it had resolved to do so.
The Bank said it would address its other concerns with the report, and evidential factual inaccuracies therein, at the appropriate time.